Chief rent

Chief rent, also known as a rentcharge, is an annual sum payable on some freehold property in the United Kingdom.

Terminology

It is particularly common in North West England, where the usual term is chief rent, and in Bristol where the terminology is rentcharge. The term groundrent is also used in many parts of the country.[1]

Chief rent should not be confused with a true ground rent, confusingly also sometimes known as a rentcharge, which is a regular payment required under a lease from the owner of leasehold property, payable to the freeholder.

History and law

Chief rent or rentcharge is a legal device which permitted an annual payment to be continually levied on a freehold property. It has been in existence since the 1290 Statute of Quia Emptores and was originally payable to the Lord of the Manor in perpetuity. Rentcharges are payable to a third party — sometimes, but not always the original builder. The payments due are typically between £2 to £5 per annum, which are no longer a significant burden due to past inflation. The Rentcharge Act 1977 barred the creation of new rentcharges from 1977 onwards, subject to very few exceptions, notably the payment of service charges for the provision services to the land (termed estate rentcharges).[2]

Old rentcharges can now be redeemed by making a lump sum payment under the Act.[3] Although many rent owners will try to make a private settlement with the rent payer,[4] the Act provides a formula which enables Department for Communities and Local Government (DCLG) to calculate the redemption figure that the rent payer has to pay the rent owner in order to redeem their rentcharge. When the transaction has been completed DCLG, on behalf of the Secretary of State, issues a redemption certificate to the rent payer.[5] Any rentcharges still in existence in 2037 will be extinguished.[6]

References

  1. ↑ "Rentcharges". Housing: Home Ownership. Department for Communities and Local Government. Retrieved 15 August 2011.
  2. ↑ Income chargeable: rent-charges, ground annuals, feu duties, HMRC. Retrieved 22 December 2011.
  3. ↑ "Chief rent". Mortgage Glossary. Retrieved 21 September 2009.
  4. ↑ Gwynne, Andrew. "Beware of Chief Rent scams". Andrew Gwynne MP. Retrieved 30 June 2014.
  5. ↑ https://www.gov.uk/rentcharges
  6. ↑ Specific deductions: rent & rates: rentcharges, HMRC. Retrieved 22 December 2011.
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